Paulson Raises Regulatory Specter

Treasury Secretary Hank Paulson said Wednesday that new regulations could be needed for investment banks since they were granted access to credit from the Federal Reserve in order to weather the financial storm that has engulfed Wall Street.

Paulson's comments came after the Fed recently provided $30 billion in emergency funds to help JPMorgan Chase(JPM Quote) buy Bear Stearns (BSC Quote) in a fire sale and agreed to allow broker-dealers to borrow directly from the central bank. That marked the broadest expansion of the Fed's powers since the Great Depression.

Paulson noted that only commercial banks and depositary institutions that are subject to "strong prudential oversight" from the Fed have had access to such credit, which has explicit backing from the U.S. taxpayers. ...